Absolute maximum for myself these days is 20% allocation of my equities portfolio (usually try to limit to 15%, unless the opportunity is too good to pass up)
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Nice response from the market so far, up 18c / 8% in 3 days.
Well someone is having a decent bite on their lunchbreak:
Attachment 13657
Largest volume in the last year, how interesting.
Hotels need to wait to summer before things pick up
https://www.rnz.co.nz/news/business/...liers-research
Thanks for linking.
My comments:
1. That report is saying summer will see “a semblance of PRE-PANDEMIC levels”. That doesn’t really mean anything to me - what is a “semblance” exactly? Hotels have still had some level of bookings during the pandemic after all, since domestic tourism accounts for a large portion of bookings. It would be an absolutely massive result that would exceed all previous expectations if next summer saw anything close to pre-pandemic levels. Truly would be a fantastic outcome, but no one is expecting that (see AirNZ expectations of tourism activity), so would be a big positive surprise. One wonders if this report is more about Colliers trying to manufacture a positive narrative to shore up hotel real estate transaction activity.
2. Hotels have already very much picked up in bookings since borders started reopening with Australia this month (Australia accounts for the majority of international tourists to NZ). The colliers report the story is based on only covers the march quarter (before borders with Australia opened) & also covers the Omicron outbreak. Despite that it reports a year on year increase in hotel occupancy in Queenstown, Wellington, Rotorua & Christchurch, which is an unexpected result (to me at least).
Some interesting tidbits releases on visitor numbers today by PM:
Quote:
Ardern says 21 international flights are landing today at Auckland airport after international travel from the visa-waiver countries resumed. She says those holding existing visitor visas from anywhere in the world can also travel here from today, with more than 500,000 such visas held.Data from Worldline (formerly Paymark), shows spending hit $420 million - some 8 percent higher than the spending at Easter from 2019.
"Our regions benefited the most, as people travelled the country, with Easter spending in Taranaki up by a quarter on 2019, 22 percent in Wairarapa, 18 percent in Whanganui, and 10 percent across Canterbury."
She says increased tourism has meant demand for workers, and more than 5000 applications have now been approved under the Working Holiday Visa category which reopened in mid-April. This is on top of over 18,000 visas reissued to people who applied pre-Covid but were unable to use.
"We know things will take time to fire back up, but the recovery has begun and well ahead of our peak tourism season which begins from October, when our border will open to the entire world."
"Our tourism industry have felt the effects of the global pandemic acutely and are working hard to prepare for the return of higher volumes of international tourists."
She says more than 4000 people with Working Holiday Visas are already in the country. We are currently seeing about 33,000 arrivals per week from overseas, she says
Things looking good in Queenstown - July apparently shaping up to being close to pre-pandemic levels.
(MCK has two large hotels in Queenstown)
https://i.stuff.co.nz/travel/news/12...pandemic-level
But no staff…..
https://www.odt.co.nz/regions/queens...f-match-demand
New Company leader announced, with extensive experience in property/REIT management.
MCK appoints Stuart Harrison as Managing Director
https://www.nzx.com/announcements/391646
Trio of good news for Hotel sector today:
1) Border reopening brought forward to July 31st for all remaining countries (those not on the visa-waiver list) - from previous date of October.
2) Pre-departure testing removed from July 31st
3) Hotels will have a special lwoer wage rate vs. the new “minimum wage” being brought in for immigration work visas for “the time being” - meaning that if needed they can bring in overseas workers at a lower wage rates than previously expected.
Very nice seeing the MCK dividend arrive in my account today!
Notes from the MCK AGM today:
- Christchurch land sale was not planned, but received an unsolicited offer they could not refuse (because it was so good) $2m book value, $18m sale price. Company still has option to re-enter Christchurch market in future if it pleases at many other locations in the city would suit.
- Millennium Queenstown highest EBITDA contributor - struggle finding staff. Pooling resources of 3 Queenstown hotel assets to optimize operations in low staffing environment, and to attract conferences etc.
- Staffing the toughest issue by the sounds of it.
- Grand Millennium Auckland reopens in June, M Social Auckland reopens July (both undergoing deep cleaning and odd bit of minor refurb following leaving MIQ pool.
- very strong financial position. Notes a lot of financial stress elsewhere in industry (which may present opportunity for MCK I think being the underlying implication)
- $15k marketing campaign generates $3 million in bookings (!), all advertising budget dedicated to social media.
- the Kingsgate to Copthorne (4-star) conversions achieves a 20% increase in rates, payback time for conversion cost is very short: 2-4 years. Greymouth conversion latest example: Rooms now $150 per night , used to be $105 average as kingsgate.
- much cheaper to upgrade existing hotels than to buy new ones, very capital efficient and great returns on conversion costs.
- Conferences big key to recovery: MCK is preparing & refurbishing its conference focused hotels (Millennium Queenstown, Rotorua, Bay of Islands etc) to be ready for summer conferences. Conference Bookings already growing. in house sales team very experienced with landing domestic & international conferences, has best conference facility in beautiful NZ locations that conference attendees want to go.
CDI: (MCK owns 66% of CDI)
- CDI doing very well, along with Sydney operation is a very good buffer for MCK while Hotel industry recovers. Year to date sales in first 4 months of year at CDI already generated enough gross margin to comfortably cushion any potential slowdown in residential land sales in 2nd half of year if that eventuates.
- CDI move into recurring income assets (commercial warehouses) already generating good returns, also chance in time to sell warehouses once it becomes tax free for sale profits (not intent to sell, but good option to have)
- CDI extended land holdings in Hamilton (124 hectares), now in position to build an “integrated development” - residential, retirement villages & healthcare centre. Same option for the new large Havelock North landholding.
- CDI has enough new landholdings for next decade of CDI land development/sales and continued revenue diversification with further commercial developments.
- Both companies (MCK & CDI) very well positioned for “new opportunities” generated by current industry turmoil. Plenty of cash, zero debt.
(I am going to miss BK’s presentations - I love his style).
I can’t believe there were zero questions!
Thanks for that LEK!
How come CDI warehouses become capital gain tax free on sale?
That sounds great.
Any current thoughts on this? Does anyone have any clue whether Ozzies are starting to flock to their hotels - or are likely to soon - or whether airbnb type sites continue to take market share... ?
MCK interim results for the 6 months ending June 30th should be released this week (last year it was released Aug 2nd).
Will be a bit of a transition 6 months, with the border reopening during the period to visa waiver countries, but not fully reopened to all (that happened yesterday on Aug 1st). And during the same period the MIQ system was essentially closed, with MCKs two MIQ Auckland hotels exiting that, and reopening for normal bookings. The period also covered the period when covid became widespread in NZ, and while most have acclimatized to “Covid -everywhere” by now and are back to regualr travel plans, that was a little different earlier this year.
(The bumper bookings for the Aussie school holidays in Queenstown Hotels will be in the next 6 months results)
MCK subsidiary CDL (MCK owns 67%) will still be chugging along as usual generating plenty of cash, so that will buttress the hotel operations transition period for the most part, and Zenith (the Sydney apartments being gradually sold down) will likely provide some cash depending on how many more units have been sold.
I’m not expecting an interim dividend (MCK historically paid dividends once a year) - but who knows, MCK has plenty of cash.
Big thing to pay attention to will be the outlook going forward.
Interim Results are out, for 6 months ending 30th June:
(mandatory reminder that the MCK/CDL group has over $1 Billion in net assets at fair market value, that is hidden behind a “cost basis” accounting method, and a stock currently trading at $2.26 has a fair market value of above $6.60 per share.)
Net Profit: $15.4 million
EPS: 9.74c
NTA gain of 13c per share
Cash on hand: $157m (zero debt)
Operating segments & notes:
- Hotels Operations: ($2.896m) net loss
Obviously still heavily impacted by Covid and closed borders during 6 month period, as well as Omicron wave hitting NZ domestic market, but outlook improving with solid forward bookings for the summer.
- Residential Property Development (Zenith Sydney apartments): $2.934m net profit
4 apartments sold, still plenty of apartments left to sell ($29m worth on a cost basis)
=== CDL operations (which MCK gets 66% share) ===
- Residential Land Development: $23m profit
Strong performance continues from the residential land sales, despite the softening market. Guidance is for full year net income in line with last year. Added to its land portfolio during the period.
- Investment Property: ($0.08m) loss
First warehouse was completed during the period, with tenant occupying in last month of reporting period (hence hardly any income recorded for this segment). 2nd warehouse due to be completed and occupied this month. Good to see an alternative revenue stream emerging.
Cash & cash equivalents:
Gigantic cash pile: $181.8m across the group (MCKs share of that is $157m). Cash generated $1.058m in interest income for the group in the 6 month period.
Net Tangible Assets: Important to remember the company restated its NTA values on its “land and building” assets to a “cost basis” last year (as opposed to the fair market value, which they still listed in the annual report earlier this year as being worth ~$1 Billion). On their cost basis method, the groups net assets increased to $635.5m (up from $617.8m 6 months ago).
MCKs portion of net assets (cost value) is as follows:
Hotel Operations: $252.59m
Res. Property Dev: $82.328m
Res. Land Development: $176.528m (65.99% of $267.508m)
Investment Property: $21.832m (65.99% of $33.084m)
MCK Net assets (cost basis): $533.278m
Divided by 158,218,286m shares = $3.37 per share
MCK have the NTA updated to $3.33 per share today, so not sure where that 4 cents difference comes from, but probably some accounting explanation.
Using the fair market value from the March annual report, along with the latest cash balance and added proeprty assets the fair market Net tangible asset per share value is over $6.60 per share
Great analysis Laser
Both MCK and CDL are trading at a massive discount to market value NTA
Probably best to price these on a yield basis
what sort of yield are these bad boys giving holders?
What is the point of this company? Their return on assets and return on equity is consistently Low. Dating back last 8 years the ratio sits between 5-8%
The highest dividend yield ever was 2.78% in 2019.
They should sell everything and give the funds to shareholders. wonder if they sold up they would get LEKs $6.60 per share?
Not really. Compared to NZX listed property companies ROA is very high, ROE is naturally not as high due to the lack of debt. If you want more exposure you could simply borrow and buy more MCK.
Paying out large dividends isn't the most tax efficient option and in the best interests of long term shareholders one could argue. Reinvesting to grow the BV is fine as sooner or later or very later it will be realised.
If you look at some of the assets they sold recently they were well above book value, so unless you think they are selling the best stuff, this should be reflective of the rest. They have no interest in pumping up the share price as they probably eventually want to take it out at a discount.
Would be interesting to hear views on long-term scenarios and the odds of each.
There must be some plan to realise intrinsic value surely?
Albeit they have done OK for shareholders so far it appears? (or consolidations??)
https://www.sharetrader.co.nz/image/...AAAElFTkSuQmCC
They seem to have done OK long term (or have consolidations inflated nominal share price gains?)
But surely the majority holders must have some plan to realise the intrinsic value.
Love to hear people's thoughts about options and how likely they are (apologies if this is old ground - haven't read back too far...)
From the 2020 annual report (when hotel assets were still recorded as fair value):
Quote:
Land and buildings are shown at fair value less subsequent depreciation for buildings. Fair value is determined by management using valuation models, and confirmed by independent registered valuers on a staged triennial basis. In the intervals between each triennial cycle an internal valuation and impairment assessment is performed for each hotel asset to ensure its carrying value continues to reflect its fair value.
If you look at the 7 year period of 12/2013 to 12/2019 which is before MCK changed the way they value their property holdings and prior to covid it paints the following picture:
The 7 year CAGR in book value is 5.7%
The avg dividend yield during that period was 2.18%
Its not exactly setting the world on fire?
Avg price/book ratio over the 7 years was 0.44. If you apply that to LEKs $6.60 fair value price per share then maybe one could say the SP is worth $6.60*0.44= $2.91.
Disc. Not a holder. Not looking to buy as better fish in the sea imo.
I know this has been discussed before on the CDI/CDL thread, but the development properties should not be included in the accounts at fair market value. The nature of their business means that these properties will be sold and, as developers, they will eventually have to pay tax on the difference between cost and sale price (and less relevant expenses). Including those properties at current fair market value would therefore overstate the value of the assets to shareholders by the amount of the tax.
The investment properties which CDI/CDL is adding to its balance sheet are, of course, another matter entirely. They're currently included at cost but IMHO should be restated to fair market value in line with property investment companies. Right now it's (probably) not particularly significant but I hope this part of CDI/CDL's business will grow over time.
I agree with that to some degree (essentially treating the land holdings for CDL residential section developments as “inventory”), although the land holdings at CDL do change in value quite significantly over the very long holding period (years) before they are finally settled on as separate titles, both from the advancement in consenting & development stages, but also from the change in the value of raw undeveloped land values.
Agree 100% on the new CDL long term investment property holdings (industrial/commercial/retail land & buildings) - any other listed property company would be revaluing those assets annually at a minimum.
Good news for MCK:
https://www.rnz.co.nz/news/business/...impact-tourism
Interim Report
http://nzx-prod-s7fsd7f98s.s3-websit...901/378764.pdf
MCK as a group made an unaudited profit before tax and non-controlling interests of $32.05 millionfor the six month period ended 30 June 2022 (2021*: $47.55 million). The main contributors to theseresults were sales of residential sections from our majority-owned subsidiary CDL Investments NewZealand Limited which continues to trade strongly and the sale of three apartments at the ZenithResidences in Sydney settled during the first six months also contributed to this result.
MCK has therefore recorded a profit after income tax and non-controlling interests of $15.40 million(2021*: $31.34 million) on group revenue for the period of $83.66 million (2021: $98.36 million). Ourearnings per share for the period decreased to 9.74 cents per share (2021*: 24.47 cps) with the prioryear reflecting the impact of a one-off gain of $15.87 million (10.03 cents per share) on disposal fromthe sale of land in May 2021 (described as other income). MCK’s Net Tangible Assets per share as at30 June 2022 was $3.33 per share (2021*: $3.20 per share).
I dont think i have ever seen such a bonkers difference between the price of the shares & preference shares, which is entirely unwarranted given the company is not facing any liquidity or ongoing concerns.
MCK Share price: $1.91
MCKPA share price: $2.20
Stamford plaza Hotel is Auckland was just sold for $170m. Just in case anyone was doubting the value of a hotel portfolio.
Are you still buying, LEK?
Too cheap not to add to your portfolio at these prices.
https://www.nzx.com/announcements/406810
**MEDIA RELEASE**
MILLENNIUM & COPTHORNE HOTELS NEW ZEALAND RECORDS A PROFIT DESPITE “TOUGH” 2022
Millennium & Copthorne Hotels New Zealand Limited (NZX: MCK) announced its 2022 results earlier today having recorded a profit after tax and non-controlling interests of $21.7 million.
“2022 was another tough year for everyone in the tourism and accommodation sectors and our results reflected that. Unlike last year, there were no one-off gains or events to help our results so as in 2021, the contribution to our profit came from property development activities”, said MCK Chair Colin Sim.
He noted that while the New Zealand hotel operations recorded a loss for the year, that result was not a true reflection of the work done to address the multiple challenges that the company had to face over the past twelve months.
“Staffing remains our biggest challenge and we asked a lot of our people last year. We had to overcome tremendous challenges in 2022 especially during those times during our high season when parts of New Zealand were still very much under Covid restrictions. Many of those challenges are still here but we believe that we are over the worst of it and can work towards profit and revenue growth once more”, he said.
MCK declared a dividend for 2022 of 3 cents per share payable on 12 May.
“The Board felt that we should reward our shareholders for sticking with us especially in tough times and sharing our belief that better days are ahead”, said Mr. Sim.
MCK also signaled that it had started 2023 positively but like a lot of New Zealand it has been affected by recent weather events in Northland and Auckland. Its hotels had escaped serious physical damage but had received multiple cancellations which would affect its February revenues. Despite these unforeseen events, MCK said that it was looking forward to increased business from events such as the FIFA Women’s World Cup and an uptick in conferencing and the return of international visitors later in the year
“We’re seeing good demand in key market segments and we are looking to add as much business as we can sustain in our hotels which have the right facilities”, said MCK Managing Director Stuart Harrison. “With our refurbishment programme well underway, we are very excited to welcome guests to our new rooms at Millennium Hotel Queenstown and in the near future to our new rooms at Millennium Hotel Rotorua and Copthorne Hotel & Resort Bay of Islands. We are also working on our programmes for other hotels which we are planning to commence later this year”, he said.
Summary of results:
--Profit after tax and non-controlling interests $21.7 million
(2021: $40.0 million)
--Profit before tax and non-controlling interests $44.8 million (2021: $64.6 million)
--Group revenue $144.2 million (2021: $164.8 million)
--Shareholders’ funds excluding non-controlling interests $531.0 million (2021: $514.2 million)
--Total assets $709.2 million (2021: $680.8 million)
--Earnings per share (cents per share) 13.72 cents (2021: 25.31 cents *) * Amount includes one-off gain from sale of land
ENDS
Purchase Agreement for Sofitel Brisbane Central Hotel
Exciting announcement!
Hopefully we will see a presentation from MCK on the proposed acquisition and the expected returns.
Based on the segment disclosures in Note 1 to the December 2022 Annual Report, I see that the Australian geographical segment (which is also the residential property development operating segment) had cash on hand of NZ$56.4 million as at 31 December 2022. Additionally the Hotel operations segment (which is currently solely NZ based) had cash on hand of NZ$45.1m, so all up MCK excluding CDI had cash on hand of NZ$101.5m. This is more than enough to fund the purchase price of 50% of the property for A$88.85m (or approximately NZ$95.9m at today's exchange rate). No doubt some debt will be raised to cover other capex and provide some operating cashflow cover, but presumably not a large amount.
MCK could always tap CDI for a special dividend, however I assume there will be plenty of good bare residential development land purchase opportunities out there over the coming months.
https://www.nzx.com/announcements/415969
Summary of Unaudited 1H23 results:
• Strong progress on Revive and Thrive strategy; Hotel operations on track for profit
• Average hotel occupancy across the Group 59.8% (2022: 38.3%)
• Group revenue $60.05 million (2022: $83.66 million)
• Profit before income tax and non-controlling interests $11.47 million (2022: $32.05 million)
• Profit after tax and non-controlling interests $6.18 million (2022: $15.40 million)
New Zealand hotel owner / operator, Millennium & Copthorne Hotels New Zealand Limited(NZX:MCK), has today announced its unaudited results for the six months to 30 June 2023, with itsNew Zealand hotel operations showing a positive recovery to near pre-pandemic levels, and currentlyon track for a return to profit in FY23.
MCK Chairman Colin Sim said that this was encouraging after a very challenging environment over thelast three years.“A tremendous amount of work is being done on the hotels’ side of the business as part of our Reviveand Thrive strategy, and our performance and improving results confirm that we are on the right track.We have seen a healthy increase in hotel occupancy over the past year as tourism has resurged.
Whilevarious challenges remain, we are expecting our hotel operations to return to profitability this year. Weare continuing to progress the acquisition of Sofitel Brisbane Central Hotel, with a number of conditionsnow met. This will provide MCK with a beachhead into Australia which we have sought for some timeand we consider it to be an important part of our future growth strategy.”
“On the property development side, CDL Investments (CDI) did not have the benefit of any uplift fromland sales as it did last year. Our prior year results included a one-off contribution from CDI from a highvalue land sale which boosted the results by $29.0 million. CDI’s results for 2023 reflect the downturnwhich started last year and has continued into 2023.”
MCK Managing Director Stuart Harrison said that MCK’s New Zealand hotel operations were on track tobe independently profitable by the end of the year.“Ensuring that our hotels are able to make and maintain consistent profitability is a key pathway to oursuccess over the next two years. Pleasingly, we are seeing increases in our revenues and occupancy,however, ongoing staff shortages continue to limit our ability to maximise occupancy and parts of ourfood and beverage operations. Our expectation is that there will be some improvement of theseconstraints by the end of the year”.
“We saw a further resurgence of business into leisure locations such as the Bay of Islands, Rotorua,Queenstown and Te Anau, and we expect to see an additional uplift across our hotel network as wehead towards summer. Considering the effects of the severe weather incidents which affected ourAuckland and Northland hotels in January and February, the 1H23 performance was a good result inunexpectedly challenging circumstances”, he said.
Highlights for the six months include the condiJonal acquisiJon of Sofitel Brisbane Central hotel, forAUD$177.7 million as a 50:50 joint venture with MCK’s parent company, Millennium & CopthorneHotels Limited; and conJnued investment into the refurbishment of the New Zealand hotel network.
While there were no new sales of the Zenith Apartments in Sydney in the last six months, contractshave been exchanged for the sale of one sub-penthouse apartment with seNlement scheduled forSeptember 2023. MCK’s aim is to complete sales of the remaining apartments over the next twoyears as the operaJonal focus shiOs towards the Brisbane investment.
Results SnapshotFor the six month period ended 30 June 2023, MCK has reported an unaudited profit before tax andnon-controlling interests of $11.47 million (2022: $32.05 million). Group revenue for the period was$60.05 million (2022: $83.66 million), with profit after tax and non-controlling interests of $6.18 million(2022: $15.40 million). The reductions are primarily due to lower sales activity recorded by MCK’smajority-owned subsidiary CDL Investments New Zealand Limited (“CDI”) which reported revenue of$11.97m (2022: $47.81m); and no one-off apartment sales (2022: $8.58m).Earnings per share for the period was 3.90 cents per share (2022: 9.74 cps). Net Tangible Assets pershare as at 30 June 2023 remained stable at $3.37 per share (2022: $3.33 per share).
Update on Sofitel Brisbane Central acquisitionIn relation to its purchase agreement for the Sofitel Brisbane Central hotel, MCK notes that approvalfrom Australia’s Foreign Investment Review Board has been obtained and that the parties are makingprogress towards settlement.“There are still a number of conditions that need to be completed before we can settle the transactionbut we believe that we remain on track to do so before the end of the calendar year”, said Mr. Harrison.
“We are excited to complete the purchase and to provide more information when we can on how thispurchase will benefit all of MCK’s shareholders”.
Outlook
MCK’s board and management remain focused on building on the positive momentum now being seenby the New Zealand hotel operations and maximising returns over the coming months.“We are targeting our New Zealand hotel operations to be profitable in their own right for the year.
Thiswill be critical as we expect profit contributions from CDI and our Zenith Apartments sales to be softerthan previous years. CDI are optimistic that sales will increase in the second half of this year butrecognise that the total number of section sales for 2023 will be below the number seen in previousyears.
CDI are actively looking at opportunities to add to their land portfolio including projects whichcan be brought to market relatively quickly”.“One-off events this year will provide a timely influx of overseas visitors across our hotel network andthe addition of new air services from later this year from key destinations in North America and Asia willalso help boost occupancies around the country”, he said.
“We have initiatives in place to manage market and economic challenges and we believe thatshareholders should be optimistic about MCK’s future as we look to revive and grow our core business.”ENDS
https://www.nzx.com/announcements/426801
MCK’S FY23 RESULT DELIVERS RETURN TO PROFIT FOR HOTEL OPERATIONS
Millennium & Copthorne Hotels New Zealand Limited (NZX: MCK) announced its 2023 results today and recorded a profit after tax and non-controlling interests of $21.6 million.
Mr. Sim noted that the New Zealand hotel operations had made real progress on its “Revive and Thrive” strategy, returning to profit after recording a loss for the 2022 financial year.
“2023 was a year of trading uninterrupted by Covid lockdown measures”, said MCK Chair Colin Sim. “The increased number of international flights returning to New Zealand has improved the visitor numbers and has translated into more demand, additional revenue and more profit but we are still short of the pre Covid level of tourists”, he said.
“We are particularly pleased that we were able to increase the hotel operations’ profit by 69% this year. That figure reflects better trading conditions from a 17.5% year-on-year overall increase in occupancy (to 61.2%) but it also reflects the hard work that has gone in to making each room as profitable as possible”, he said.
Highlights during the year included:
• Settling the acquisition of the Sofitel Brisbane Central Hotel in December 2023;
• Copthorne Hotel Palmerston North hosting the winning Spanish Women’s National Football Team during the key group stages of the 2023 FIFA Women’s World Cup held in New Zealand and Australia;
• Hotel room refurbishments with 132 rooms completed at Millennium Hotel Queenstown, and work continuing on the remaining 70 rooms plus commencing refurbishment of 99 rooms in Millennium Hotel Rotorua;
• Commencing the recladding, reglazing and installation of air-conditioning into the Copthorne Hotel Palmerston North;
• Renewal of bank facility through to January 2027 with an increased limit of $120.0m;
• Restaurant One80 (located in Copthorne Hotel Oriental Bay) winning the Burger Wellington competition, part of the annual Visa Wellington On a Plate food festival, beating over 200 entries from across the city.
--Financial Performance & Financial Position
For the year ended 31 December 2023, MCK recorded a profit attributable to owners of the parent of $21.6 million (2022: $21.7 million). Of particular note, MCK’s New Zealand hotel operations contributed a profit before tax of $11.6 million (2022: $4.0 million loss), as the 2026 Revive and Thrive strategy continues to be rolled out.
This positive turnaround reflects not only the return to open borders and uninterrupted trading, but also the sharp focus on improving profitability across our network during the year. Building on this profit growth will be key to our 2024 results. The results for CDL Investments New Zealand Limited (“CDI”), our majority-owned subsidiary, reflected a softness in the residential property markets which resulted in contributing $18.7 million (2022: $43.3 million) to our overall pre-tax profit numbers.
Our total revenue in 2023 was $145.7 million (2022: $144.2 million) and our earnings per share was 13.65 cents per share (2022: 13.72 cents per share). At 31 December 2023, MCK’s shareholders’ funds excluding non-controlling interests was $547.9 million (2022: $531.0 million). Total assets increased to $746.8 million (2022: $709.2 million) with net asset backing (with land and building at cost and before distributions) also increasing to 345.8 cents per share (2022: 335.4 cents per share).
--New Zealand Hotel Operations
In 2023, our New Zealand hotels recorded an operating revenue of $101.1 million (2022: $65.2 million) for the year. This increase is pleasing and reflects a return to pre-pandemic demand patterns both domestically and internationally.
Overall, we recorded an occupancy percentage of 61.2% (2022: 43.7%) across all of our hotels and we also saw a healthy increase in average RevPAR (Revenue Per Available Room) of $120.03 (2022: $76.59). The RevPAR increase is pleasing given our efforts to improve the profitability of each room sold. This had been particularly challenging at the commencement of the year with a shortage in staffing levels and severe weather events impacting the ability to sustain the business demand.
Ensuring that our physical product remains competitive is important to reviving our future revenues and profits. The second stage of our refurbishment at Millennium Hotel Queenstown was completed at the end of 2023 with a further 132 rooms completed. 2024 will see additional work done on the remaining 70 rooms and 18 suites which are expected to be completed by Q3 2024. The first stage of the guest room refurbishment at Millennium Hotel Rotorua of 99 rooms is reaching completion and will be ready before the end of Q1 2024.
--CDL Investments New Zealand Limited (“CDLI”)
As noted above, CDLI’s 2023 results reflected some weakness in the property markets seen from the end of 2022 which carried over into part of 2023. Despite this, CDLI was still able to record an operating profit after tax for the year of $13.5 million (2022: $31.2 million).
CDLI has kept its dividend at 3.5 cents per share and is due to be paid in May.
--Australia Update
We were delighted to complete the acquisition of the Sofitel Brisbane Central in December 2023 after announcing the acquisition in March together with our immediate parent company Millennium & Copthorne Hotels Limited (UK). While there was minimal benefit to our 2023 results given the timing of completion, we are looking forward to seeing the hotel do well over the next twelve months given its strong performance in its key market segments and very positive occupancy and room rates. As announced previously, the hotel will continue to be managed under its existing hotel management agreement and branding.
MCK continues to sell down its Zenith Residency apartments in Sydney with a total of five (2022: 5) apartments sold during 2023. We continue to own and manage 31 apartments being predominantly one bedroom units with some two – three bedrooms units. MCK will continue to sell down its interest in the Zenith Residences in 2024 and utilize these funds within its Australian operations.
Dividend Announcement
MCK’s Board has resolved to declare and pay all shareholders a fully imputed dividend of 3 cents per share for 2023. The dividend, payable to all shareholders, will be paid on 17 May 2024 with a record date of 10 May 2024.
The Board has determined that the dividend balances provide a consistent level of returns to shareholders and retain sufficient cash resources required for ongoing refurbishment and other projects.
--Outlook
We are entering the 2024 year with a sense of optimism, with many things to look forward to. MCK remains on track with its “Revive and Thrive” strategy with the completion of key refurbishments in Queenstown and Rotorua. New refurbishment projects at Copthorne Hotel & Resort Bay of Islands (and others currently being assessed) will see commencement during 2024 and are expected to be completed within the year. We expect them to deliver additional revenue growth as soon as they become available.
Even though we have not noticed a meaningful return of Chinese visitors, with visitor numbers steadily improving and more flight capacity into New Zealand, particularly in the high seasons, we are expecting this growth in numbers to translate into additional demand for accommodation at our key properties. We are working hard across all of our business segments to maximise the number of confirmed bookings at our properties and improve our market share throughout.
We will also have the benefit of a full year’s trading from Sofitel Brisbane Central which we expect to be strong.
Our optimism is tempered with a note of caution – the cost of doing business continued to increase in 2023 and we expect these increases to continue to a lesser extent in 2024. While some of these increases can and will be partially offset by the ability to increase room rates in response to demand, we are conscious of optimising our business to ensure that our growth opportunities are not adversely affected.
We believe we are on track with our Strategy to Revive and shift to Thrive. We continue to be focused on reviving our people, products and profits throughout 2024.
--Thank you